ReWalk Robotics stumbles 6 months after IPO

ReWalk's exoskeleton system--Courtesy of ReWalk

ReWalk Robotics ($RWLK) is encountering a few stumbling blocks 6 months after making its Nasdaq debut, with shares taking a hit in light of widening net losses and investor skepticism about the market for its flagship robotic exoskeleton device.

The Yokneam, Israel-based company fell 64% to $13.26 in trading, just 10% above its IPO price of $12 a share, Bloomberg reports. ReWalk raised $36 million in September in an initial public offering below its proposed price range of $14 to $16, but its share price jumped threefold in the first two days of trading--one of the best trading debuts for companies that listed in the U.S. in 2014. Now, the device maker is back at square one as investors question potential hurdles as it brings its exoskeleton to market. ReWalk's device is FDA-approved, but getting the product to consumers and having insurers sign on to the product's $71,000 could be an uphill battle.

"There are challenges ahead, and the main one is to get reimbursement from insurance companies," Barclays analyst Matthew Taylor told Bloomberg. "There are so many patients clamoring to get access to this device, but there is not enough clarity as to how the reimbursement question will be solved."

ReWalk won FDA clearance for its robotic exoskeleton in June 2014 through the agency's de novo classification process for "first-of-its-kind" medical devices that are considered low to moderate risk. The exoskeleton consists of a fitted metal brace that supports the knees and upper back; motors at the hips, knees and ankles; a tilt sensor; and a backpack that holds a computer and power supply. ReWalk's exoskeleton could help 218,000 paraplegics in the U.S. alone, a market potentially worth "billions of dollars," CEO Larry Jasinski told Bloomberg.

While customer response to ReWalk's exoskeleton seems to be positive--more than 80 treatment centers currently use the device globally, with half of the centers in the U.S.--the company's net losses and reimbursement questions still raise a few red flags. ReWalk's fourth-quarter net loss widened to $5.5 million from $3.5 million during the same period last year, and the company does not have full reimbursement support from most insurance providers as most require additional clinical and cost-effectiveness data, Bloomberg reports.

"A lot of it is we need to demonstrate that the market is real," Jasinski told the news outlet. "I can't forecast a future stock price, but I can forecast that if we make this a multi-dollar business, the stock price will come along. There is no comparable category for us, which makes it a little harder."

Meanwhile, ReWalk faces competition from other devicemakers developing innovative exoskeleton products for patients with spinal cord or brain injuries. In 2012, Ekso Bionics rolled out its self-contained, full-body robotic walking suit with mechanical braces and crutches. The company had already scored European for the product and supplies the bionic suits to rehab centers in the U.S., Europe and South Africa. ReWalk also counts Parker Hannifin ($PH) as a competitor, which in 2013 nabbed a clinical trial deal to with a major rehab hospital to test its Indego device in individuals with spinal cord and brain injuries, strokes and multiple sclerosis.

- read the Bloomberg story